From SEBI’s accounting investigation to ED’s latest probe: How Rajesh Exports fell under multiple investigations. The Enforcement Directorate (ED) has stepped up its probe into Rajesh Exports Ltd after it claimed to have found suspicious overseas transactions worth about Rs 3,000 crore, missing records of a Rs 1,035 crore investment in African mines and a 40 per cent mismatch between recorded and physical stock during searches at the company’s premises. The agency had alleged that more than Rs 600 crore could have been syphoned out of the country through suspected share manipulation involving NRI benami entities. It had conducted searches at nine locations in Bengaluru and Mumbai a day ago. The ED also probed the unusual remuneration given to the top management of the company.
Rajesh Exports’ consolidated turnover clocked nearly 7.7 lakh crore, while its managing director is being paid a sum of ₹17,000 a month and its chief financial officer of the company has not been paid a salary since April 2020.
The investigation is being conducted under the Foreign Exchange Management Act, 1999 (FEMA), and is in progress, the agency said. Documents and digital evidence seized during the searches are being examined.
Rajesh Exports stock price today
The latest developments weighed on sentiment among investors. Following the latest developments with the ED, Rajesh Exports shares traded at Rs 97.02, down Rs 5.10 or 4.99 per cent, from the previous closing on the NSE at 11:10 am IST on Thursday, June 25. ED had earlier filed a charge sheet against the Chinese company in a Rs 13,000 crore Punjab National Bank scam.
How did Rajesh Exports come under the scanner?
The ED’s action did not happen in a vacuum. The development comes after a persistent probe by the Securities and Exchange Board of India (SEBI) into Rajesh Exports, which had earlier raised questions about the company’s financial reporting and overseas operations.
The probe was initiated by the market regulator after a shareholder filed a complaint in March 2024 on exceptionally high outstanding trade receivables, a source said, on condition of anonymity. While the probe progressed, SEBI had been requesting the company and its overseas subsidiaries for sales data, customer-wise; purchase data; accounting data; and transaction-level data.
Many of those records were either incomplete or not available, SEBI’s interim order earlier this month noted, making it difficult to independently verify a large chunk of the company’s overseas revenue reported between FY21 and FY25.
The regulator has also directed a fresh forensic audit and barred the promoter-chairman Rajesh Mehta from accessing the securities market until further proceedings. But it has been evident that its findings are preliminary and the investigation is continuing.
Against this backdrop, the ED has initiated its own FEMA investigation into Rajesh Exports’ overseas investments, foreign trade transactions and foreign exchange dealings.
What did ED find during its searches?
The ED said it had recovered documents and electronic evidence indicating a number of suspected irregularities after searches at nine locations in Bengaluru and Mumbai. The agency has identified several areas that are now being closely monitored.
Why do the authorities question the Rs 3,000 crore foreign trade settlement?
One of the major issues raised by the ED pertains to foreign trade receivables and payables around Rs 3,000 crore.
The agency said that Rajesh Exports adjusted overseas receivables against payables related to entities based in the UAE and other foreign jurisdictions. Investigators are looking into the use of these opaque offsets to disguise the true nature of foreign exchange transactions.
The ED said a lack of supporting records has made it difficult to independently verify the authenticity of these transactions.
What is the row over the African investment of Rs 1,035 crore?
The ED has also questioned the company’s claim of having invested Rs 1,035 crore in African mining projects.
During the searches, the agency said, investigators found no contemporaneous records or other documents that supported the investment. The ED further said that the company failed to produce the requisite documents later.
The agency is now probing whether the overseas investment complied with the FEMA rules and whether it was disclosed.
Why are missing foreign transactions a concern?
The ED alleged that Rajesh Exports had not produced important documents relating to imports, exports, investments abroad and settlement of foreign trade receivables and payables.
The agency said the lack of such records makes it “almost impossible” to independently verify the authenticity of several overseas deals.
One of the main problems in the current investigation is the lack of documentation.
What is the 40% stock discrepancy?
Officials of the ED also verified the physical inventory at one of the company’s premises during the searches.
It said that the stock on the premises differed by about 40 per cent from the amount entered in the factory registers.
Now investigators are looking into whether accounting lapses, operational issues or other irregularities led to the mismatch.
Why did the ED question the salary structure of the company?
The inquiry also exposed some of the more bizarre findings about the pay handed out to the company’s senior management.
The ED said that despite Rajesh Exports reporting consolidated revenue of around Rs 7.7 lakh crore, the Chief Financial Officer of the company has not drawn any salary since 2020, while the Managing Director was paid a mere Rs 17,000 per month.
The investigators said that the numbers did not fit with normal commercial practices for a company of this size, and it has included them in its wider probe.
What is the alleged Rs 600 crore share manipulation case?
The ED had also alleged suspicious block deals in Rajesh Exports shares.
The International Consortium of Investigative Journalists (ICIJ) has published disclosures naming some of the persons involved, who investigators say may have offshore connections.
The agency has alleged that NRI benami entities may have pumped over Rs 600 crore out of India through share manipulation. The broader FEMA probe is now looking into these deals.
How does this issue tie in with SEBI’s investigation?
The two probes are intertwined, though the two agencies are looking at different parts of the company’s operations.
SEBI is looking at the accounting practices adopted by Rajesh Exports, as well as the financial reporting and disclosures made by its overseas subsidiaries. Meanwhile, the ED is investigating whether the company’s overseas transactions and investments were in accordance with India’s foreign exchange laws.
The investigations range across accounting records, overseas investments, inventory management and share trading.
What does Rajesh Exports say?
In a stock exchange filing on June 4, the company has refuted the allegations made by SEBI against Rajesh Exports.
The company has stood by its reported revenues and said the regulator’s observations were preliminary. It has blamed a communication gap for the issues and said it is in the process of submitting all the documents and clarifications asked by the regulator.
The company has not responded publicly to the ED’s latest findings following the search operations.
What happens next?
SEBI’s forensic audit and accounting investigation are also underway, while the ED continues to analyse the documents and digital evidence recovered during the searches.
Both probes are ongoing at this point, and neither has reached a final conclusion. The findings of the two regulators will determine whether the alleged accounting and foreign exchange irregularities constitute regulatory violations or can be adequately explained by the company.
(Disclaimer: This article is for informational purposes only and should not be considered investment advice. The views, opinions, and recommendations expressed herein are those of the respective experts. Readers are advised to consult a qualified financial advisor before making any investment decisions.)
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Priyanka Roshan is a business writer and assistant editor at the NewsX website who tracks everything from stock market swings and corporate earnings to personal finance trends and policy shifts. Known for turning fast-moving business developments into sharp, reader-friendly stories, she combines speed, accuracy, and a data-driven approach to break down complex financial news for everyday audiences.
With over 9.5 years of newsroom experience, Priyanka has worked with leading media organisations, including Bussiness, Times Now, and Ping Digital, covering diverse beats such as business, politics, technology, auto, travel, sports, and the world. From live breaking news desks to SEO-led digital storytelling, she specialises in creating engaging content that keeps readers informed without overwhelming them.
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